Supreme Court of India
RELIANCE INFOCOMM LTDversusBHARAT SANCHAR NIGAM LTD. & ORS.
- Citation
- 2008 INSC 557
- Decided
- 30 April 2008
- Disposal
- Dismissed
- Bench
- S H KAPADIA
Holding
The service is WLL(M) and liable to pay ADC; TRAI's circular is clarificatory, and retrospective levy of ADC is permissible.
Summary
The Supreme Court examined Reliance Infocomm Ltd.'s challenge to BSNL's demand for Access Deficit Charges (ADC) on its "Unlimited Cordless" service, arguing that the service should be classified as Fixed Wireless Local Loop (WLL(F)) and thus exempt from ADC. The Court considered the definitions in the Telecommunication Interconnection Usage Charges Regulation, 2003, and the Unified Access Service Licence, determining that the service exhibited mobility beyond the subscriber's premises and therefore fell within the limited‑mobility category WLL(M). It held that TRAI's circular of 4 March 2005 was merely clarificatory, not amendatory, and that the levy of ADC could be applied retrospectively as the classification had been fixed since 2003. The Court emphasized that categorisation of services for charging is a policy matter within TRAI's regulatory competence. Consequently, the appeal was dismissed and the demand for ADC upheld.
Issues considered
- Whether the "Unlimited Cordless" service is to be classified as WLL(M) or WLL(F) for the purpose of ADC under the 2003 IUC Regulation.
- Whether TRAI's circular dated 4 March 2005 is a clarificatory or amendatory instrument affecting the licence conditions.
- Whether ADC can be levied retrospectively on the period 14 November 2004 to 26 August 2005.
Legislation cited
- Telecom Regulatory Authority of India Act, 1997s. 13, s. 18
Subjects
Access Deficit ChargeWireless Local LoopWLL(M)WLL(F)Fixed Wireless AccessTRAITelecommunication RegulationUnified Access Service LicencePremises Specific RestrictionRetrospective levy
Judgment
[2008] 7 S.C.R. 201
RELIANCE INFOCOMM LTD. A
II.
BHARAT SANCHAR NIGAM LTD. & ORS.
(Civil Appeal No. 936 of 2006)
APRIL 30, 2008
B
(S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.)
Telecommunication Usage Charges Regulation, 2003:
S.2 (XXV/11) and Clarificatory Circular dated March 4,
2005, issued by TRAI: c
Access Deficit Charges/Interconnection Usage Charges
- Levy of, on Wireless Local Loop (Mobile) Services -
Opposed by the licensee of Unified Access Service on ground
that fixed Wireless Service as used by it limited to one Base D
Transceiver Station, thus, classifiable as Wireless Local Loop
(Fixed) and falls under exception to such levy levy/demand -
Held: Access deficit is the difference between costs and local
calls as incurred by respondent in providing cordless services
to be funded through demand/levy of Access Deficit Charges
on licensee/services provider - TRA/ issuing Regulations and E
Explanatory memorandums specifying principles for such levy
- Categorization of services for levying a charge by way of
ADC/IUC is a matter of policy an,d revenue recognition and is
part of regulatory requirements - Service provider well aware
of distinction underlying between WLL(M) and WLL(F) in F
connection with cellular service - The categorization of the
services into fixed wireline and wireless services with further
classification into fixed wireless Access and limited/full mobility
has been reflected in the Unified Access Service License
issued to appellant-licensee - Regarding chargeability of G
ADC/IUC, TRAI followed it by issuing regulation/Explanatory
memorandum and clarificatory circulars classifying the service
impugned as WLL(M) - Since service impugned is not capable
of complying with Premises Specific Restriction Test, it is
201 H
202 SUPREME COURT REPORTS (2008] 7 S.C.R.
A WLL(M) and not WLL(F) - Hence the licensee is liable to pay
ADCllUC - Directions issued by Circular dated 4.3.2005 by
TRAI is clarificatory in nature and amendatory and by
prescribing in it Premises Specific Regulation TRAI did not
intend to reclassify WLL(F) service as WLL(M) - There is no
B retrospectivity involved in the case, therefore, ADC could be
changed with retrospective effect - No infirmity found in the
impugned order warranting interference by Supreme Court.
Words & Phrases:
c 'Base Transceiver Service', 'Fixed Wireless Access',
'House Location Registers', 'Mobility', 'Public Telephone
Network', 'Visitors Handover Location Register' in the context
of Telecommunication Usage Charges Regulations, 2003.
WLL(F) & WLL(M) - Distinction between - Discussed.
D
'Fixed Wireless Terminal' and 'Fixed Wireless Access'
- Distinction between - discussed.
The questions which arose for determination before
this Court in the present appeal were as to whether the
E Unlimited Cordless Service (UDS) as provided by the
appellant, the Licensee is classifiable as Wireless Local
Loop (Mobile)/WLL (M) service for the purpose of payment
of Assess Deficit Charges as held by the Telecom
Regulatory Authority of India in terms of Regulation
F (XX.VIII) of the Telecommunication Interconnection Usage
Charges Regulation 2003 or as to whether it is classifiable
as Fixed Wireless Phone Service (FWPS)/Fixed Wireless
Service (FWS) limited to one Base Transceiver Service
(BTS), a Wireless Local Loop (Fixed)/WLL(F) and,
G therefore, not liable to payment of Access Deficit Charges
as claimed by the appellant.
Dismissing the appeal, the Court
HELD: 1.1 Regulatory regime includes methodology
H for calculating access deficit. Access deficit is to be
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 203
NIGAM LTD. & ORS.
funded through Access Deficit Charge (ADC). Access A
deficit has to be calculated according to a formula which
provides a reasonable return on the investment made, i.e.,
a return on capital employed. Interconnected Usage
Charges (IUC)/ADC is part of revenue regime. It is for TRAI
to consider the framework used for calculating IUC/ADC, 8
a subsidy. Access deficit essentially is to compensate
the difference between costs and local calls revenue.
(Para - 18) [220-E, F; 221-A]
1.2 From time to time, TRAI has issued Regulations.
These regulations are accompanied by Explanatory C
Memorandums. ADC has been specified differently in
these regulations for fixed, Wireless Local Loop (Mobile)
or WLL(M) and cellular mobile calls. In doing so, the TRAI
has kept in mind the fact that standard tariffs have been
fixed for fixed line calls. In terms of the Explanatory D
memorandum issued by it, ultimately the basic principles
underlying IUC/ADC regime has been laid down. One of
the important principles laid down is that ADC shall be
funded from all calls, except fixed to fixed, local etc.
(Para -18) [221-B, C, D] E
1.3 Categorization of services for levying a charge
by way of IUC/ADC is a matter of policy and revenue
recognition and is the part of regulatory regime. If one
examines the various Regulations made by TRAI from
time to time, including Telecommunication F
Interconnection (Charges and Revenue sharing)
Regulation 2001, WLL(M) stood defined to mean limited
mobility telephony service using wireless in local loop
technology within a Short Distance Charging Area (SDCA).
In the matter of levy of ADC, the Explanatory G
"~ Memorandums indicate that service providers are well
aware of what is WLL(M), what is WLL(F) and what is
cellular mobile service right from 2001. (Para - 20)
[221-G, H; 222-A, B]
H
204 SUPREME COURT REPORTS [2008] 7 S.C.R.
A 1.4 Every service provider knew the difference
between fixed wireline and three types of wireless
services, namely, Fixed Wireless Access(FWA), limited
mobility and full mobility. Further, these three categories
of wireless services constitute a condition of Unified
B Access Service(UAS) licence. The categorization is done
in the UAS Licence dated 20.7.2001 and the follow up
regarding chargeability of IUC/ADC is done under the
Regulations made by TRAI. Therefore, no merit is found
in the submission of the appellant that by the circular
c dated 4.3.2005 TRAI has classified/reclassified the
impugned service as WLL(M). (Para - 21) [222-D, E, F]
2. The design of a wireless system does not only aim
to optimise performance for specific applications, but also
at reasonable cost. Therefore, economic factors impact
D the design for wireless system. When it comes to the
design of wireless systems and services one has to
.
distinguish between two different categories. "Systems"
where the mobility is of value by itself - e.g., in cellular
telephony. Such services can charge a premium to the
E customers - i.e., more expensive than wired systems. In
services, wireless access is intended as a cheap cable
replacement, without additional features. The classic
example of such service is Fixed Wireless Access (FWA).
Such system is cost-effective, as the infrastructure is
F cheaper than laying of new wired connection. The point
to be emphasized is that FWA is a service where wireless
access is intended as cheaper cable replacement without
additional features. Mobility is an inherent feature of most
wireless systems and has important consequences for
system design. It is there in FWA, but if it exceeds the
G
premises of the subscriber for ADC purpose it becomes
classifiable as WLL (M). (Para - 23) [223-A-E] ••
3.1 The wireless systems differ in the amount of
mobility that they have to allow for the users. In cellular
H telephony, a mobile user communicates with a base
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 205
'y NIGAM LTD. & ORS.
station that has a good radio connection with the user. A
The base stations, however, are connected to Mobile
Switching Centre (MSC) which in turn are connected to
public telephone system. In the cellular principle, the area
served by a network provider is divided into cells. In
J. y
cellular telephony there is unlimited mobility. The user can B
be anywhere within the coverage area of the network in
order to be able to communicate. He can move from one
cell to the other during one call. The cellular network
interfaces with Public Switched Telephone Network
("PSTN"). (Para - 26) [224-8, C, D, E] c
3.2 FWA is a one type of wireless service. It is a
derivative of cordless phone, essentially replacing a cable
connection between the user and the public landline
system. In FWA there is no mobility of the user device. The
purpose of FWA lies in providing users with telephone and D
data connections without having to lay cables from its centrai
switching office to the office or premises of the subscriber FWA
has its market for covering rural areas which do not have
wired infrastructure. FWA is Wireless Access Application
in which the location of the end-user termination and the E
network access point to be connected to end-user are
fixed. Therefore, what is WLL(F) was well known to the
service providers both in terms of technology and also
in terms of IUC Regulations. (Para - 27 & 29) [224-E, F;
226-A] F
"Wireless Communications" by Andreas F Molisch -
referred to.
3.3 The payability of the ADC as per the Regulations
is directly related to the nature of the service and not i:o
G
the instrument. In case of FWA, the antenna in the
'* instrument and the end-user termination point location-
wise remains fixed. The network access point remains
connected to the end-user in FWA. (Para - 30} I226-8, CJ
4.1 In WLL(F) the telephone is the access point if the H
206 SUPREME COURT REPORTS [2008) 7 S.C.R.
A antenna is in-built in the telephone. If the impugned
service is operable throughout SDCA it is WLL(M). In
WLL(F), location of end-user termination and the network
access point to be connected to the end-user are fixed. If
the impugned service cannot comply with PSR it is
B classifiable as WLL(M) for IUC, ADC, Numbering Plan etc. '
The only difference between fixed wireline and WLL(F) is
that WLL(F) is a cheap cable replacement without additional
features. WLL(F) is limited to specific premises of the
subscriber or permanent location. (Para - 31) (226-E, F]
C 4.2 The Base Transceiver (BTS) is different from
Mobile Swicthing Centre (MSC} in terms of functionality.
The function of BTS primarily is confined to transmission
and communication. On the other hand, MSC is an
exchange. Two databanks exist in the MSC, namely, Home
D Location Register ("HLR") and Visitor Location Register
"VLR". HLR is a central data base that keeps track of the
location a user is currently at; the VLR is a data base
associated with a base station that knows all the users
that are currently within the coverage area of a specific
E base station. If a mobile station moves across a cell
boundary, a different base station becomes the serving
BS. In other words, the MS is handed over from one
base station to another without interrupting the call.
This process is known as "Handover''. (Para - 32) (226-G;
F 227-A, BJ
"Wireless Communications" by Andreas F. Molisch -
referred to.
5.1 In the instant case, this Court is basically
G concerned with the levy of ADC charge on a given call.
The identity of the call and the caller is checked not by
the base station but by the MSC. The Numbering plan is ...
also in MSC and not in the BTS. But with the
communication linkage between MSC and BTS.
H (Para - 32) [227-C]
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 207
NIGAM LTD. & ORS.
5.2 The function of BTS is to receive the signals and A
forward the same to the MSC. MSC is the intelligent part
of the network. MSC has the registration of numbers to
be served by the service provider, the mechanism to
. ;
.
identify the caller is not with the BTS. HLR is the primary
database for all subscriber information, VLR is a network 8
entity whose main function is to provide service to
subscribers who are served from a different HLR. The
MSC communicates with the VLR to obtain subscriber
information to support call processing. The VLR gets its
information about visiting roamers from HLR. (Para - 32) c
[227 -F, G, H]
"Wireless Intelligent Networking" by Gerry Christensen,
Paul G. Florack and Robert- referred to.
5.3 Fixed Wireless Terminal (FWT) units differ from
D
,_ conventional mobile terminal units operating within
cellular networks - such as GSM - as FWT or desk phone is
limited to a permanent location. (Para - 32) [228-A]
5.4 FWA is a service which is limited to permanent
location. The significance of FWA is that it dispenses with E
the last mile wireline connectivity and to that extent it is cost
effective. The wireless access point is a device that
connects wireless communication devices together to
form a wireless network. Wireless Access Point (WAP)
usually connects to a wired network. The term 'fixed F
.y
wireless' refers to the operation of wireless devices or
systems in fixed locations. (Paras - 32 & 33) [228-A, B, C]
'Encyclopedia .of Technology Terms' by Whatis. Com. -
referred to.
G
6.1 A network consists of several access networks,
,. .:,. which include the radio equipment that is necessary to
interconnect by the core network. (Para - 34) (228-F]
Location-Based Services-Fundamentals and Operations
by Axel Kupper; From WPANs to Personal Networks- H
208 SUPREME COURT REPORTS [2008] 7 S.C.R
A Technologies and Applications" by Ramjee Prasad and Luc
Deneire - referred to.
6.2 The main purpose of FWA is to provide network
access to buildings through exterior antennas
communicating with central radio base stations. (Para - 35)
B [229-B, C]
From WPANs to Personal Networks- Technologies and
Applications" by Ramjee Prasad and Luc Deneire - referred
to.
C 7.1 There is no merit in the contention of the appellant
that ADC cannot be charged retrospectively. There is no
retrospectivity involved in the present case. The
classification of services was done under the UAS licence
and the chargeabilitylpayability was fixed under the IUC
o as far back as 2003. The reasons given both in terms of
technology and also policy framework are in addition to
the reasons given by TDSAT in its impugned judgment.
-·
Hence no infirmity is found in the impugned judgment of
TDSAT. (Para - 36) [229-E, F, G]
E 7.2 No merit is found in the argument of the
appellant that mobility within one BTS is a category by
itself. If that argument is to be accepted it would amount
to carving out one more category of service which is
impermissible. In any event, it is technically not possible
F as it would deteriorate the quality of service. (Para - 37)
[229-G; 230-A]
7.3 In regard to the question as to whether ADC was
admissible for wireless access it may be stated that at one
point of time, the idea mooted was that all fixed service
G providers, including BSNL, were entitled to ADC. This was
one of the items on the Agenda on TRAI as per Para 2.26
of the consult::ition paper on Interconnecting Usage ...
Charge Review. If ADC was to be made admissible for
Fixed Wirnless services provided by all fixed service
H phones then the pricing of the product would become an
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 209
NIGAM LTD. & ORS.
item of dispute not only between cellular/mobile operators A
and fixed service providers but also inter se amongst fixed
service providers, i.e., between those who complied with
PSR and those who did not. In fact, but for PSR, the
T
difference between WLL(F) and WLL(M) would stand
• obliterated. Therefore, TRAI referring to its directive dated B
4.3.2005 invited response from service providers to the
suggestion of the appellant that services need to be
located to a particular RF Sector of a base station. Inviting
such response cannot be construed as abandonment.
Moreover, the later correspondence indicates that even c
foreign experts nominated by the appellant have certified
that linkage to a particular RF Sector of the base station
would result in deterioration in the quality of the services
provided by the appellant. (Para - 41) [232-C-G]
.. 7.4 The true test to differentiate between WLL(F) and D
WLL(M) services is: whether the impugned service of the
appellant is capable of being confined as far as its mobility
is concerned to the subscriber's premises. If not, the
impugned service is WLL (M) for levy of ADC. There is no
dispute that the impugned service, as far as its mobility is E
concerned, cannot be confined to the premises of the
subscriber. In other words, since the impugned service
is not capable of complying with PSR test it is WLL(M).
(Para - 41) [232-G; 233-A]
7 .5 It is true that the show cause notice dated F
15.1.2005 issued by TRAI was given in the context of
certain advertisements given in the newspaper by Tata
Teleservices Ltd. and by the appellant. However, vide the
show cause notice(s) the appellant was called upon to
. -~-
explain why the impugned service is not considered to G
WLL(M). In fact, a reply was given to the show cause notice
by the appellant which indicates that the appe!lant clearly
understood the show cause notice and, therefore, gave
its explanation as to why the impugned service should
be treated as WLL (F) and why the impugned service H
210 SUPREME COURT REPORTS [2008) 7 S.C.R.
A should not be categorized as WLL(M). Hence keeping in
mind the technology, the policy framework and the thrust
of the entire correspondence between TRAI, DoT and the
appellant it is very clear that the concept of FWA was well
known in the market and in the business right from 2003
B and in that light that the impugned circular dated 4.3.2005
of TRAI was clarificatory in nature and, therefore, the
demand of ADC as made by BSNL for the period
14.11.2004 to 26.8.2005 is valid in law and justified in terms
of the UAS licence. (Para - 42 & 43) [233-C-G]
C 7.6 The questions regarding quantification of the
amount are left open to be decided in accordance with
law at the appropriate stage by the competent authority.
(Para - 44) [234-A-B]
7 .7 No infirmity is found in the reasons given by
TDSAT in its impugned order. (Para - 44) [234-C]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 936
of 2006.
From the Judgment and order dated 17.1.2006 of the
Telecom Disputes Settlement and Appellate Tribunal, New Delhi
(TDSAT) in Petition No. 108 of 2005.
Gopal Subramanian, ASG, P.P. Tripathi, ASG, K.K.
Venugopal, J.J. Bhat, Rakesh Dwivedi, Dr. A.M. Singhvi, Anjali
Chandiyalker, Manali Singhal, K. Raj, Gopal Sanker Narayan,
Abhijat P. Medh, Maninder Singh, Pratibha M. Singh, Gaurav
Sharma, Suneet Bhatia, Surabhi Mehta, Yoginder Handoo,
Tejveer Bhatia, Sanjay Kapur, Shubhra Kapur, ~ajiv Kapur, Arti
Singh, Manjul Bajpai, Amit Bhandari, Arun Dhillon, Ritika Chawla,
Viraj Kadam, Navin Chawla and Anil Katiyar for the appearing
parties.
The Judgment of the Court was delivered by
' .
KAPADIA, J. 1. This civil appeal is filed under Section 18
of Telecom Regulatory Authority of India Act, 1997 ("1997 Act")
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 211
NIGAM LTD. & ORS. [KAPADIA, J.]
by M/s Reliance lnfocomm Ltd. against judgment and order A
delivered by Telecom Disputes Settlement and Appellate
Tribunal ("TDSAT") dated 17.1.2006 dismissing petition No. 108
of 2005 challenging the directive dated 4.3.2005 by the Telecom
Regulatory Authority of India ("TRAI"), circulars dated 23.3.2005
.,, and 26.8.2005 issued by DoT and demands raised by BSNL B
• for ADC for the period 14.11.2004 to 26.8.2005.
2. The short question which arises for determination in this
civil appeal is whether "Unlimited Cordless" service" ("the
impugned service" for short) of the appellant is covered under
the definition of WLL(M) service as defined in Regulation c
2(xxviii) of the Telecommunication Interconnection Usage
Charges Regulation, 2003 which defines WLL(M) as limited
mobility service using WLL technology within Short Distance
Charging Area ("SDCA"). According to TRAI and DoT, fixed
wireless phones ("FWP")/fixed wireless service ("FWS") which D
operate beyond the subscriber's premises is classifiable as
WLL(M) service for the purpose of payment of ADC to BSNL
whereas, according to the appellant, FWS is limited to one base
transceiver station ("BTS") within which the service operates
and, consequently, this service is classifiable as WLL(F) and E
not as WLL(M).
Facts:
3. On 18.3.1997, appellant was granted licence by DoT
for providing basic services in Gujarat which included fixed F
wireless services but which preferred wireless technology for
the subscriber local loop. On 20.7.2001 appellant was granted
·licence by DoT for providing basic services-Jn different service
areas in the country which included fixed wireline service and
limited mobile service. In November, 2003 appellant was
G
permitted to migrate to the Unified Access Service Licence
("UASL") which categorized wireless services into 3 categories,
·~
viz., fixed wireless access ("FWA"}, limited mobility [WLL(M)]
and fully mobile service(s).
Submissions of Shri K. K. Venugopal, learned senior H
212 SUPREME COURT REPORTS [2008] 7 S.C.R.
A counsel for the appellant:
4. According to the appellant, in November, 2003 appellant
was permitted to migrate to UASL under which appellant was
permitted to provide following services: (i) Fixed Wireless (ii)
FWA (iii) WLL(M) (iv) Fully Mobile Service. According to the
B appellant, ever since its migration to the UASL, it has been
operating fixed services including FWAand full mobile services.
' 1
The appellant was not operating WLL(M). According to the
appellant, "limited mobile service" has been defined in UASi....
granted by DoT and in the iUC Regulation 2003 framed by TRAI
c under Section 11 of the 1997 Act as a service which enables
operations throughout a SDCA. At this stage, it may be noted
that the whole of Delhi is one single SDCA. That, appellant was,
therefore, operating its FWA service within the area of one Base
Transceiver Station (BTS).
D
5. According to the appellant a BTS is necessary wherever
there is a congested area, like Chandni Chowk where digging •
for laying an optical fibre cable is not feasible and, in such a
case, a 8TS has to be set up where wireless link has to be
established between the telephone exchange and the BTS which
E in turn could be accessed by teleph0ne receiver set through
Radio Frequency ("RF") signals. However, according to the
appellant, in the case of full mobile cellular services, several
BTSs. are required to be set up by Aach service provider in the
entire service area for transmitting signals to the terminals
F (handsets). That, these handsets are required to be aligned
electronically to a single BTS or the handset could access RF
signals from other base stations BTSs. from any part of the
SDCA. According to the appellant, in case of full mobility, the
signals are available in the entire service area (a telecom circle
G equivalent to a State). Therefore, according to ~he appellant,
fixed wireline service being a wireiine service alone stood
restricted to the subscriber's premises as is clearly understood -< •
even under the UASL whereas Vl/LL(M) is defined specifically,
both in the UASL. as well as in the !UC Regulation 2003, as a
H service where mobility is restricted to the SDCA. That, in the
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 213
NIGAM LTD. & ORS. [KAPADIA, J.]
..,,..
IUC Regulation 2003, FWA [WLL(F)] service has been treated A
as part of the fixed services. Therefore, according to the
appellant, its "unlimited cordless" service ("impugned service"
for short) stood classified right from the inception as WLL(F).
According to the appellant, FWA service is a wireless service,
~
mobility is inherent in such services but that mobility is not meant B
• for the entire SDCA as in that event such mobility would fall in
the category of WLL(M) and, therefore, according to the
appellant, FWA service logically stands between a fixed wireline
service restricted to the subscriber premises and WLL(M) where
mobility is within the SDCA.
c
6. According to the appellant, the said logical concept was
known to OoT and TRAI right from inception, that the technical
and statutory authority understood the said concept with regard
to FWA clearly to mean as restricted to one BTS and that it is in
this context that the mobility of the appellant's phone is available !)
in the restricted area of one BTS and not within the entire SDCA
That, this is the reason why even the DoT specifically inquired
from the appellant vide letter dated 31.1.2005 (in the context of
alleged violation of licence condition on account of certain
advertisements issued by the appellant) as to whether the E
mobility of the appellant's phone stood limited to one BTS area
or whether it is available in the area outside one BTS. This letter
of OoT is relied upon by the appellant to show that right from
1997 upto 31.1.2005, Do T and TRAI understood FWA services
as having mobility limited to one BTS area alone. According to F
-" the appellant, it is in the above context that even the TRAI in its
Consultation Paper dated 17 .3.2005 categorically stated that
its intention was to permit mobility only within the ~overage :if
RF sector of one BTS, in the area where the subscriber is
registered and not to the areas which are covered by other base
G
stations. According to the appellant, throughout the period 2003
.. .I-
till 4.3.2005 its service was accepted as a fixed wireless access
service ("FWA service") and that only because of the
advertisement issued by the appellant in January, 2005 that
BSNL complained to the TRAI and to the OoT. The said
H
214 SUPREME COURT REPORTS [2008] 7 S.C.R.
A advertisement was regarding Unlimited Cordless. According
to the appellant, TRAI called upon the appellant vide letter dated
6 .1.2005 not to advertise its impugned FWA service as
"unlimited cordless". That in the said letter dated 6.1 .2005 TRAI
did not call upon the appellant to answer the question as to
B whether impugned service is available within the entire SDCA
or within one RF sector of BTS. According to the appellant, such "
a question was not even raised by DoT in its letter dated
31 .1.2005 by which only a limited clarification on the "numbering
scheme" for the impugned service was asked for. That query
c was as follows:
"Whether fixed wireless terminal could be authenticated
by BTS terminals other than by BTS serving the location
of the subscriber as on 10. 1. 2005"
7. According to the appellant, the impugned letter of TRAI
D
dated 4.3.2005 is an aberration for the simple reason that having
accepted the impugned service as FWA as restricted to one
BTS, it directs all access providers to strictly ensure that the
terminal used for FWA confined to the subscriber's premises.
That, having said so, TRAI thereafter hastened to refer to a
E question in the Consultation Paper of TRAI dated 17.3.2005 in
which, after referring to the complaint of certain operators, TRAI
stated that it had asked all service providers on 4.3.2005 that
Fixed Wireless Terminals {"FWTs.") should provide services to
the subscriber at the fixed address only, the intention being that
F these phones should not be in a position to offer mobility through
-:
other base stations located in other parts of the city and that the
impugned service needs to be allocated to a particular RF sector
of a single base station, otherwise issues of ADC and
comparison with limited or full mobility may take place. According
G to the appellant, the above statement of TRAI itself suggests
that FWA services are those which are limited to one BTS.
According to the appellant, therefore, even as late as 4.3.2005 ..
TRAI understood the concept of FWA service as limited to one
base station within the SDCA. Therefore, according to the
H appellant, the decision of TRAI dated 4.3.2005 is an aberration.
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 215
NIGAM LTD. & ORS. [KAPADIA, J.]
That the said decision was taken unilaterally and at the behest A
of BSNL without examining the merits of the contentions
advanced by the access providers like Reliance lnfocomm Ltd.
According to the appellant. it was a unilateral decision to confine
FWA services to the premises of the subscriber. According to
the appellant, in any event, when the matter was a part of the B
Consultation Paper dated 17 .3.2005 it was not open to TRAI to
unilaterally issue such a direction restricting FWA services to
the premises of the subscriber.
8. According to the appellant, BSNL could not have made
demand on it for payment of ADC during the period 14.11.2004 C
to 26.8.2005 as it was admitted by TRAI and DoT that no ADC
is payable on FWA services. In this connection, according to
the appellant, one of the questions posed for consultation in
Para 2.7 was "what criteria should be determined with regard
to the range and portability/mobility of WLL(F)'s subscriber D
terminals". According to the appellant, the said query itself
indicates that the issue as to the range of portability/mobility of
WLL(F) was pending in the consultation process and, therefore,
BSNL could not have raised a demand on the appellant for ADC
when the matter was sub-judice. According to the appellant it is E
this demand of BSNL which made the appellant move TDSAT
for settlement of dispute.
9. According to the appellant, circumstances mentioned
above clearly indicates that in 2005 upto 4.3.2005 both DoT
and TRAI understood FWA services as limited to one BTS and F
the decision dated 4.3.2005 given by TRAI is a unilateral
decision imposing Premises Specific Restriction ("PSR") for
the first time at the behest of BSNL. Further, according to the
appellant, in the petition before TDSAT, the appellant has
specifically posed a vital question for consideration, namely, G
.. , whether the impugned service provided by the appellant should
be restricted within one BTS and if so whether such service will
fall in the category of WLL(F) or WLL(M) service. According to
the appellant, TDSAT has not answered this question. Apart
H
216 SUPREME COURT REPORTS (2008] 7 S.C.R.
A from the said question, appellant had also raised other questions
such as whether the impugned directive of TRAI dated 4.3.2005
and the clarification dated 23.3.2005 by Do T for the first time
introducing the concept of SPR would amount to amendment of
the licence conditions without following the consultation process
B as stipulated under the 1997 Act. Similarly, one more question '> l
was also raised before TDSAT as to whether directive dated
4.3.2005 was legally valid. According to the appellant, none of
the said important questions have been answered by the
impugned decision of the TDSAT and. therefore, the said
c decision needs to be set aside. According to the appellant, the
said questions ought to have been decided by a statutory body
consisting of technical members, particularly to analyse the
above mentioned various submissions raised by the appellant.
10. According to the appellant, nowhere in the pleadings
iD of SSNL, the issue that a WLL(F) is a service where an antenna
is fixed at the top of the house connected by the wire to the
handset plugged into the wall has been raised. That the said
technology has not been discussed even by TDSAT in its
impugned judgment. According to the appellant, the literature
E on this point is confusing. That, there is no affidavit to support
the claim of BSNL that FWA service is one where an antenna is
fixed at the top of the house connected by wire to the handset
plugged into the wall and, therefore, this aspect needs to be
considered by a statutory body of technical members alone. In
'· F this connection, appellant alleges that even today the affidavit
of BSNL do not answer the questions posed by the appellant
as to how many of their fixed wireless terminals were with the
roof-top antenna and what numbering plan was followed by BSNL
for their FWT and LL(M). Appellant alleges that an inference
~ may be drawn of admission on the part of BSNL that it had
\.:l
!
16,00,000 fixed wireless terminals which are similar to the fixed
wireless telephones of the appellant as there is no denial ' '
regarding allegation made in this connection by the appellant
·11. Lastly, it is the case of the appellant that the levy of
I
H
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 217
NIGAM LTD. & ORS. [KAPADIA, J.]
ADC is a matter of tax policy and, therefore, any provision relating A
to a charge has to be strictly interpreted. According to the
appellant different stands taken by the authorities show that the
issue as to what is WLL(F) falls in a grey area and, therefore,
no ADC can be charged from the appellant. That, the said
1 question has not been decided. even by TRAI. That, the IUC B
Regulation 2003 are statutory in nature; they have been enacted
under Section 36 of the 1997Act; that the regulations having
been tabled before both the Houses of Parliament cannot be
altered or modified by circulars/letters/administrative directions
issued by the Authorities under the 1997 Act including the TRAI. c
Contentions of Shri Gopal Subramanium, learned
senior counsel for BSNL
12. According to BSNL, the appellant's service under the
name "unlimited cordless" is a WLL(M) (wireless local loop
D
mobile service) as admittedly the said service is capable of
,--';
being operated outside the subscriber's premises and within
the SDCA. That the said service is squarely covered by the
definition of WLL(M) as defined under clause 2(xxviii) of the
IUC Regulation 2003. According to BSNL, appellant has
attempted to evade its liability of paying ADC to BSNL despite E
providing WLL(M) services in the garb of WLL(F). With regard
to payment of IUC charges including ADC by WLL service which
contains a feature of "mobility", the TRAI issued clarification
dated 4.3.2005 based on exclusive definition of WLL(M) in its
!'
IUC Regulation 2003. According to BSNL, any WLL service F
which gives the facility of mobility beyond the premises of the
subscriber and within SDCA has to be treated as WLL(M) in
respect of liability to pay the ADC in accordance with the
provisions of the IUC Regulation 2003. According to BSNL,
subsequent to the Consultation Paper dated 17 .3.2005, the G
TRAI reiterated vide communications dated 24.3.2005 and
,• ~
31.5.2005 addressed to the appellant herein that the WLL
service operating beyond the premises of a subscriber and
within the SDCA is to be treated as WLL(M) for all purposes
including payment of IUC/ADC and numbering plan etc. H
218 SUPREME COURT REPORTS [2008] 7 S.C.R.
.....
A 13. On the technology side, it is the case of BSNL that
payment of IUC/ADC has nothing to do with the nature of the
instrument and it is the nature of service which is relevant for
that purpose. That "unlimited cordless" is the service which is
provided through a handheld terminal.
8 14. On the point of reliance placed by the appellant upon
~
para 2.26 of the Consultation Paper it is submitted by BSNL
that the Consultation Paper was only a suggestive approach.
That, in any case, the question falling in consultation process
was whether ADC is payable to the fixed wireless terminals.
c What is WLL(F) and what is WLL(M) was not the question
pending in the consultation process. According to BSNL, in any
case the question whether ADC is payable to the fixed wireless
terminals was part of the explanatory memorandum to the IUC
Regulation dated 6.1.2005 itself and, therefore, it is the case of
D BSNL that Para 2.26 of the Consultation Paper relied upon by
the appellant was merely a suggestive approach for the future
payment of ADC on WLL phones.
15. According to BSNL, there is no merit in the contention
of the appellant that its impugned service is restricted to one
E BTS/RF centre as the same is not technologically possible. In
this connection, it is submitted on behalf of BSNL that BTS has
only a receiver and a transmitter. It has no Intelligent Network
("IN"). The function of the BTS is different from the functionality
of Mobile Switching Centre ("MSC"). The utility of the BTS is
F that it receives the signals and forwards the same to the MSC.
The MSC is the intelligent part of the network. BTS is not the
intelligent part of the network. Registration of the numbers to be
served by the service provider is an eiement of the intelligent
network. Identification of the caller. is done by the intelligent
G network. Therefore, according to BSNL, it would be incorrect to
say that a BTS has some sort of mechanism to identify the caller
and to further forward the call to the MSC. Therefore , MSC is
. •.
the IN and BTS is only the transceiver (i e receiver and
transmitter). That, the role of a base station v1s-a-vis that of a
H MSC is, therefore, distinct and separate According to BSNL,
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 219
, NIGAM LTD. & ORS. [KAPADIA, J.]
there is no plea even in the petition that appellant can restrict A
the mobility of its service to one RF of a base station and that
the services of the appellant is operable only in 1/3 of one base
station zone. According to BSNL, the mobility of the service
impugned cannot be restricted to the premises of the subscriber
' and, therefore, it has to be treated as WLL(M). This is borne B
~ out, according to BSNL, from the opinion of the manufacturers
of the equipment of the appellant which clearly imports an
admission of the appellant that to restrict the impugned service
to the premises of the subscriber would be impractical and if it
is so restricted it would adversely impact its quality. That, in any
c
event, the impugned service is actually found to be operable
throughout the SDCA and, therefore, it is a WLL(M). Therefore,
according to BSNL, appellant was liable to pay ADC as per the
rates prescribed by TRAI in its regulations.
16. According to BSNL, the directive/communication dated D
A;
4.3.2005 issued by the TRAI only reemphasises the position
mentioned in the IUC Regulation dated 29.10.2003, namely, that
a fixed wireless terminal, if not confined to the premises of the
customer, will invite mobility within SDCA which in turn would
attract ADC charges on such services. Further, according to E
BSNL, under the terms and conditions of licence issued by DoT,
the appellant had agreed to comply with the relevant International
Telecom Union ("ITU") standards as also the TEC's
specifications. That, even according to the generic requirements
issued by TEC, the remote station of the subscriber had to be F
" "fixed indoor wall mounted". That even as per the
recommendations of the ITU, the FWA has to be a Wireless
Access Application in which the location of end-user termination
and the network access point to be connected to the end-user
are fixed. According to BSNL, this technical information is well
G
known and the appellant is fully aware of the concept of FWA.
... ,le
According to the appellant, the IUC Regulation 2003 provides
for payment of IUC including ADC for telecommunications
services. The definition of WLL(M) is provided for in clause
2(xxviii) which refers to limited mobility services using wireless
H
220 SUPREME COURT REPORTS·. [2008] 7 S.C.R.
y
A in local loop technology within SDCA. That, Schedule Ill of IUC
Regulation 2003 refers to ser1ice and not to instrument and
makes ADC applicable for different types of calls and, therefore,
the payability of ADC as per the regulations is directly related
to the nature of the service and not to any kind of instrument.
\
B 17.According to BSNL, there is no merit in the submission •
of the appellant that DoT has reclassified the impugned service
as WLL{M) as, according to BSNL, it has been made clear by
the DoT on numerous occasions that if the impugned services
cannot be restricted to the premises of the subscriber, it will be
C treated as WLL{M) for levy of ADC. That, what is clarified by
TRAI and DoT is that those WLL services which operate beyond
. the premises of the subscriber and within the SDCA shall be
treated as WLL{M) for all purposes including numbering plan,
payment of IUC, payment of ADC etc. Therefore, according to
D BSNL, the "unlimited cordless" service of the appellant is
squarely covered by the definition of WLL(M) in clause 2{xxviii)
of the IUC Regulation 2003 which defines WLL{M) phones as
WLL{F) which operates within SOGA Therefore, according to
BSNL there is no merit in this civil appeal and the same d.:!serves
E to be dismissed with costs. · ·
. Finding:
18. Regulatory regime includes methodology for calculating
access deficit. Access deficit is to be funded through access
F deficit charge. Access deficit has to be calculated according to
a formula which provides a reasonable return on the investment
made, i.e., a return on capital employed. !UC/ADC is part of
revenue regime. It is for TRAI to consider the framework ust)d
for calculating I UC/ADC. Costing is one of the important relevant
G factors to be kept in mind while calculating !UC/ADC. While
doing so, the TRAI has also to keep in mind changes in
technology and reduction in costs both 1Jf services as well as of
--( ,.
equipment. ADC is a subsidy. It is given to BSNL to incur
additional capital expenditure for rolling out le!0com nehvork in
rural .areas equivalent to approximately 10 lacs lines at the
H
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 221
... NIGAM LTD. & ORS. [KAPADIA, J.]
relevant time. (see: Explanatory Memorandum dated A
24.1.2003). Access deficit essentially is to compensate the
difference between costs and local calls revenue. In other words,
when costs are more than the revenue, BSNL incurs a loss which
needs to be compensated. It is the additional capital expenditure
over local calls revenue for rolling out telecom network in rural B
areas which attracts ADC. From time to time, TRAI has issued
IUC Regulations, particularly in the years 2003 and 2005. These
regulations are accompanied by Explanatory Memorandums.
ADC has been specified differently in these regulations for fixed,
WLL(M~and cellular mobile calls. In doing so, the TRAI has kept
in mind the fact that standard tariffs have been fixed for fixed
c
line calls. (see: Table XI in Annexure A which is Explanatory
Memorandum dated 24.1.2003). In the said Memorandum,
basic principles underlying IUC/ADC regime has been laid
down. One of the important principles laid down is that ADC
D
shall be funded from all calls, except fixed to fixed, local etc. We
have different types of calls, i.e., fixed to fixed, fixed to WLL(M),
fixed to cellular, WLL(M) to fixed, WLL(M) to WLL(M) etc.
19. The purpose of the above discussion on ADC regime
is to highlight the fact that ADC regime has evolved over a period E
of time, notified for the first time in the TRAI Regulation dated
24.1.2003 and reviewed on 29.10.2003 etc. The point to be
noted is that ADC regime right from January, 2003 is a matter
of policy framework initiated by TRAI to promote lower domestic
prices, competition and to give rise to strong subscribers growth. F
, It involves pricing of services like mobile service, fixed service,
WLL(M) servic:e etc.
20. The· above discussion is to highlight the difference
between concepts evolving in the technological field which may
be relevant but not conclusive in pricing and costing or in matters G
. _, of calculation of ADC which, as stated above, constitutes return
on capital employed for BSNL. Therefore, categorization of
services for levying a charge by way of IUC/ADC is a matter of
policy and revenue recognition, which is the part of regulatory
regime. If one examines the various regulations made by TRAI H
222 SUPREME COURT REPORTS [2008) 7 S.C.R.
,.,
A from time to time, including Telecommunication Interconnection.
(Charges and Revenue sharing) Regulation 2Q01, WLL(M)
stood defined as far back as 14.12;2001 to 111€an limited
mobility telephony service using wireless in local loop technology
within a SOGA. In the matter of levy of ADC, the Explanatory
B Memorandums indicate that service providers are well aware \.
of what is WLL(M), what is WLL(F) and what is cellular mobile •
service right from 2001. This point is -to be emphasized as it
has been vehemently urged on behalf of the appellant repeatedly
that vide circular dated 4.3.2005, for the first time, unilaterally,
c the TRAI has prescribed PSR, which amounts to reclassification
of WLL(F) service as WLL(M) service, which, according to the
appellant, amounts to an aberration. ,
21: We do not find merit in this contention advanced on
behalf of the appellant for two reasons. Firstly, as stated above,
D computation of ADC falls within policy framework which is a
part of the !UC Regulations. Every service provider knew the
difference between fixed wireline and three types of wireless
services, namely, FWA, limited mobility and full mobility. Further,
these three categories of wireless services constitute a condition
E of UAS licence. The categorization is done in the UAS Licence
dated 20.7.2001. We find merit in the argument of BSNL that
classification has taken place in the licence and the follow up
regarding chargeability of !UC/ADC is under the Regulations
made by TRAI. Therefore, we find no merit in the submission
F advanced on behalf of the appellant that by the said circular
dated 4.3.2005 TRAI has classified/reclassified the impugned
service as WLL(M). Secondly, in this judgment, we propose to
examine several references in technological do"main, which
bring out the difference between WLL(F) service and WLL(M)
service.
G
22. At the outset, in the context of technology, we may point .
out that licence does not use the word 'WLL(F)'. The said licence .;. .
uses the words FWA, limited mobility and full mobility. Mobility
is a service feature. This aspect needs to be kept in mind. In
H .this case, we are not concerned with the type of instrument, we
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 223
. ., NIGAM LTD. & ORS. [KAPADIA, J.]
are concerned with the nature of the services provided by a A
given instrument, be it, a walky or a handset of the appellant.
23. The design of a wireless system does not only aim to
optimise performance for specific applications, but also at
-.;
reasonable cost. Therefore, economic factors impact the design
for wireless system. When it comes to the design of wireless B
systems and services we have to distinguish between two
different categories. "Systems" where the mobility is of value by
itself - e.g., in cellular telephony. Such services can charge a
premium to the customers - i.e., more expensive than wired
systems. In cellular telephony, the per-minute price was higher c
than the landline telephony in the past. However, in the second
category, we have "services" in contradistinction to system. In
services, wireless access is intended as a cheap cable
replacement, without additional features. The classic example
of such service is FWA. Such system is cost-effective, as the D
. ..\
infrastructure is cheaper than laying of new wired connection .
The point to be emphasized is that FWA is a service where
wireless access is intended as cheaper cable replacement
without additional features. Mobility is an inherent feature of
most wireless systems and has important consequences for E
system design. It is there in FWA, but if it exceeds the premises
of the subscriber for ADC purpose it becomes classifiable as
WLL(M).
24. In the light of the above discussion and in the context
• of technology, we must now understand what is FWA. This F
concept is mentioned as a service in the UAS Licence dated
20.7.2001. It is necessary to understand this concept as one of
the main contentions adva(lced on behalf of the appellant is that
FWA is the service which is restricted to one BTS alone.
Therefore, it is necessary to know what is BTS, Exchange G
(
. ,·-
Numbering Plan and MSC in the context of their functionalities .
25. By way of introduction, it may be stated that in 1990
FWA and wireless local loop (WLL) came into the market to
replace the copper lines to the premises of the users by wireless
H
224 SUPREME COURT REPORTS (2008] 7 S.C.R.
·r'
A links but without the specific benefit of mobility, the original
motivation for WLL was to give access to customers for
alternative providers of phone services bypassing the copper
lines. However, since 2003 several developments led to wireless
revival as it gave broader range of products, data transmission
B with a higher rate for existing products and higher user densities. ).-
•
26. Briefly, we may state that the wireless services consist
of broadband, paging, cellular telephony, cordless telephony,
FWA, satellite cellular communications etc. It may be noted that
wireless systems, however, differ in the amount of mobility that
c they have to allow for the users. In cellular telephony, a mobile .
user communicates with a base station that has a good radio
connection with the user. The base stations, however, are
connected to Mobile Switching Centre ("MSC1 which in turn
are connected to public telephone system. In the cellular principle,
D the area served by a network provider is divided into cells. In
cellular telephony there is unlirnited mobility. The user can be "-
anywhere within the coverage area of the network (i.e., is not
limited to a specific cell), in order to be able to communicate.
He can move from one cell to the other during one call. The
E cellular network interfaces with Public Switched Telephone
Network ("PSTN").
27. FWA is also one type of wireless service. It is a
derivative of cordless phone, essentially replacing a cable
connection between the user and the public land line system. In
F FWA there is no mobility of the user device. The purpose of
FWA lies in providing users with telephone and data
connections without having to lay cables from its central
switching office to the office or premises of the subscriber. (see:
page 14 of the book entitled "Wireless Communications" by
G Andreas F. Molisch). FWA has its market for covering rural areas
which do not have wired infrastructure.
--:'"- .
28. Mobility is an important requirement for wireless
service. The ability to move around while communicating is one
of the main attractions of wireless communications for the user.
H
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 225
., NIGAM LTD. & ORS. [KAPADIA, J.]
However, within that requirement of mobility, different grades A
exist:
Fixed Devices:
Fixed Devices are placed only once and thereafter they
./
communicate with their BS or each other from the same B
location. The main reason for using wireless transmission
is to avoid laying of cables. In the case of fixed devices,
the devices are not mobile. FWA falls in the same category
as wired communications (example, the PSTN)
Nomadic Devices: c
These are devices that are placed at a certain location for
a limited duration of time and then moved to a different
location. Example of nomadic device is a laptop.
Low Mobility: D
Many communication devices like cordless phones as
well as cell phones are operated by walking human users.
The effect of low mobility is a channel that changes rather
slowly, and - it operates in a system with multiple base
E
stations - handover from one cell to other is the rare event.
High Mobility:
Cell phones operated by people in moving cars are one
typical example.
F
Extremely High Mobility:
Extremely High Mobility is represented by high-speed
trains and planes.
29. The above analyses indicates that there is no mobility G
of the user devices in FWA. Even as per ITU standards, TE C's
specifications and generic requirements issued by TEC, remote
station of the subscriber in FWA has to be "fixed indoor wall
mounted" along with other equipments. This is the basic TEC
guidelines for fixed services. The remote station in FWA has to H
226 SUPREME COURT REPORTS [2008] 7 S.C.R.
A be wall mounted and fixed. FWA is Wireless Access Application
in which the location of the end-user termination and the network
access point to be connected to end-user are fixed. Therefore,
what is WLL(F) was well known to the service providers both in
terms of technology and also in terms of IUC Regulations.
B 30. As stated above, the UAS licence refers to three
categories of wireless services, namely, FW~ service, limited
mobility service and full mobility service. The·payability of the
ADC as per the regulations is directly related to the nature of
the service and not to the instrument. In case of FWA, the antenna
C in the instrument and the end-user termination point location-
. wise remains fixed. The network access point remains
connected to the end-user in FWA. The test to be applied to
distinguish WLL(F) from WLL(M) is that if the impugned service
cannot be restricted to the place of the subscriber then such
D service has to be classified as WLL(M) for the purposes of ADC. ,.._
In the present case, the impugned service cannot be technically
confined to the premises of the subscriber. The impugned
service cannot comply with PSR. Therefore, it has to be
classified as WLL(M) service for ADC purposes. ;
E 31. To sum up, in WLL(F) the telephone is the access point
if the antenna is in-built in the telephone. If the impugned service
is operable throughout SDCA it is WLL(M). In WLL(F), location
of end-user termination and the network access point to be
connected to the end-user are fixed .. If the impugned service
F cannot comply with PSR it is classifiable as WLL(M) for IUC,
ADC, Numbering Plan etc. Lastly, the only difference between
fixed wireline and WLL(F) is that WLL(F) is a cheap cable
replacement without additional features. WLL(F) is limited to
specific premises of the subscriber or permanent location.
G
32. One aspect on technology needs to be explained. BTS
is different from MSC in terms of functionality. The function of
;. .
BTS primarily is confined to transmission and communication.
On the other hand, MSC is an exchange. Two databanks exist
H in the MSC, namely, Home Location Register ("HLR") and Visitor
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 227
NIGAM LTD. & ORS. [KAPADIA, J.]
Location Register ("VLR"). HLR is a central data base that keeps A
track of the location a user is currently at; the VLR is a data
base associated with a base station that knows all the users
that are currently within the coverage area of a specific base
station. If a mobile station moves across a cell boundary, a
different base station becomes the serving BS. In other words, B
the MS is handed over from one base station to another without
interrupting the call. This process is known as "Handover". (see:
page 34 of the book entitled "Wireless Communications" by
Andreas F. Molisch under the caption "User Mobility".) The
important thing to be noted in this case is we are basically c
concerned with the levy of ADC charge on a given call. The
identity of the call and the caller is checked not by the base
station but by the MSC. The Numbering plan is also in MSC
and not in the BTS. In this case, we are not concerned with the
communication linkage between MSC and BTS. In this case, D
we are essentially concerned with the existing service in MSC
on the basis of which a charge could be levied depending on
the type of the originating call. If a Walky call is to be classified
as FWA service then the integrity of the Numbering plan would
stand infringed. The Numbering plan is co-related to the
Database in the MSC. It is for this reason that we have examined E
the differences in the services, namely, cellular, cordless, FWA
etc. It is for this reason that we have analysed the types of
devices, namely, fixed device, nomadic device, low mobility, high
mobility etc. In our view, MSC is the intelligent network and
BTS is only a receiver and transmitter The function of BTS is F
to receive the signals and forward the same to the MSC. MSC
is the intelligent part of the network. MSC has the registration of
numbers to be served by the service provider, the mechanism
to identify the caller is not with the BTS. HLR is the primary
database for all subscriber information, VLR is a network entity G
. , whose main function is to provide service to subscribers who
are served from a different HLR. The MSC communicates with
the VLR to obtain subscriber information to support call
processing. The VLR gets its information about visiting roamers
from HLR. (see: "Wireless Intelligent Networking" by Gerry H
228 SUPREME COURT REPORTS (2008] 7 S.C.R.
-,..·
A Christensen, Paul G. Florack and Robert Duncan at p. 77).
According to Wikipedia, Fixed Wireless Terminal ("FWT") units
differ from conventional mobile terminal units operating within
cellular networks - such as GSM - as Fwr or desk phone is
limited to a permanent location. Therefore, all the above
B literature and reference books indicate that FWA is a service
which is limited to permanent location. The significance of FWA t '
is that it dispenses with the last mile wireline connectivity and
to that extent it is cost effective. The wireless access point is a
device that connects wireless communication devices together
c to form a wireless network. Wireless Access Point ("WAP")
usually connects to a wired network.(see: Wikipedia)
33. According to Whatis.com's 'Encyclopedia of
Technology Terms' the term 'fixed wireless' refers to the
operation of wireless devices or systems in fixed locations such
D as home and offices. They derive their electrical power from
the utility mains, unlike mobile wireless or portable wireless which
are battery-powered. Although mobile and portable system can
be used in fixed locations, their efficiency is compromised when
compared with fixed systems. One of the important assets of
E fixed wireless that subscribers in remote areas can be brought
into a network without the need for new cables or optical fibres
across the country side.
34. The difference in the functionalities of a base station
and MSC is brought out in the book titled Location-Based
F Services-Fundamentals and Operations" by Axel Kupper. A
network consists of several access networks, which include the
radio equipment that is necessary to interconnect a terminal to
the network. The access networks in turn are interconnected by
the core network. In GSM network, the access network is
G different from the core network. In GSM, for example, the excess
network consist of two components, namely, BTS and BSC
(base station controller). Allocation and release of channels is ~ .
done by BSC. It is BSC which is responsible for control of
handover, a function which is needed to keep a circuit switched
H connection, particularly if the subscriber moves between base
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 229
NIGAM LTD. & ORS. [KAPADIA, J.]
....,
stations. Therefore, each BSC controls several BTSs., which A
are connected to the BSC via fixed lines or radio link systems.
On the other hand, MSC connects a number of BSCs. to the
network. It is responsible for serving a limited geographic region,
which is given by all base stations connected to the MSC over
I their BS Cs. In other words, MSC is part of the core network. It is B
>
not a part of access network. The intelligent network is in MSC.
35. In the book titled "From WPANs to Personal Networks-
Techno/oqies and Applications" by Ramjee Prasad and Luc
Deneire, the main purpose of FWA is to provide network access
to buildings through exterior antennas communicating with c
central radio base stations.
36. In our view, the above discussion indicates that both in
terms of technology and in terms of policy framework, in the
matter of ADC payability, the classification of wireless services
D
into three categories, namely, FWA, limited mobility and full
mobility was well known to service providers both under IUC
Regulation, generic requirements, TEC's recommendations and
even under telecommunication technology. Therefore, there is
no merit in the contention advanced on behalf of the appellant
that the impugned decision of TRAI dated 4.3.2005 and the E
impugned decisions of DoT dated 23.3.2005 and 26.8.2005
respectively are unilateral decisions regarding classification. In
our view, circular dated 4.3.2005 issued by TRAI is clarificatory
and not amendatory. There is no merit in the contention of the
appellant that ADC cannot be charged retrospectively. There is F
"
no retrospectivity involved in the present case. The classification
of services was done under the UAS licence and the
chargeability/payability was fixed under the IUC as far back as
2003. The reasons given hereinabove, both in terms of
technology and also policy framework are in addition to the G
. '
reasons given by TDSAT in its impugned judgment. We find no
infirmity in the impugned judgment of TDSAT.
37. Before concluding on this topic, we may state that, in
the light of our above discussion we find no merit in the argument
H
230 SUPREME COURT REPORTS [2008] 7 S.C.R.
,..
A ?f the appellant that mobility within one BTS is a category by
itself. It that argument is to be accepted we are carving out one
~-ore category of service which is impermissible. In any event,
1t 1s technically not possible as it would deteriorate the quality of
service. Under the UAS Licence, the three services are Fixed
B Wireless/WLL(F), WLL(M) and Cellular Mobile. \
"
38. One of the contentions raised on behalf of the appellant
is that of abandonment of the theory/test of PSR by TRAI.
According to the appellant, the above test formulated by TRAI
in its directive dated 4.3.2005 stood later on abandoned by TRAI
c and in that connection appellant has placed reliance on para
2.26 of the Consultation Paper. As stated above, PSR stands
for Premises Specific Restrictions.
39. We find no merit in this argument. For the sake of
convenience, we quote hereinbelow para 2.26 of the
Consultation Paper on Interconnection Usage Charge Review,
which reads as follows:
"C. Whether ADC should be Admissible for Wireless
Access?
2.26 For ADC purpose, presently calls to/ from WLL(F)
are being treated similar to calls to/from fixed lines. TRAI
received complaint from a certain Operator Association
which stated that 'Fixed wireless services being provided
by the FSPs./UASL's are classified as fixed services and
thus entitled to ADC. However these services are for all
intents and purposes tantamount to full cellular services
and can be offered seamlessly throughout the service area.
This creates a non-level playing field and competitively
disadvantages the cellular operator vis-a-vis the fixed
wireless service provider.' The Authority has very recently
asked all Service Providers that FWTs should provide ..
services to the subscriber at the fixed address only, the
intention being that these phones should not be in a
position to offer mobility through other Base Stations
located in other parts of the city. Service needs to be
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 231
NIGAM LTD. & ORS. [KAPADIA, J.]
locked to a particular RF Sector of a base station, A
otherwise issues of ADC and comparison with Limited or
full mobility takes places."
The said para 2.26 is in two parts. Firstly, it refers to a
; complaint from certain cellular Operator Association, which
,,.
stated that, in many cases fixed wireless services are being B
provided by fixed service phones (operators) which services
for all practical purposes tantamount to full cellular services and
thereby they create a non-level playing field vis-a-vis the cellular
operators. This was the complaint from the cellular operators
against fixed wireless service providers. Under the consultation c
process, whenever such complaints are received by TRAI they
are required to be addressed to. Therefore, a response was
sought by P~AI from fixed wireless service providers to the
above complaint. The Consultation Paper is dated 17.3.2005.
... By that time, the impugned directive dated 4.3.2005 had been D
4
issued by TRAI. Referring to the said directive, in para 2.26, the
TRAI had stated, in the first instance, that all fixed wireless service
providers have been informed by the said directive that fixed
wireless terminals should provide services to the subscribers
at the fixed address only so that the said fixed wireless E
terminals/phones should not be in a position to offer mobility
through other base stations located in other parts of the city
This underlined portion is emphasized by the appellant to
support its contention that TRAI has in its consultation paper
dated 17.3.2005 accepted the stand of the appellant that FWA F
services should be restricted to one base station and not to the
subscriber's premises. The appellant has placed heavy reliance
on this underlined portion in support of its contention that vide
Consultation Paper dated 17.3.2005, the TRAI has abandoned
the premises theory mentioned in directive dated 4.3.2005.
G
According to the appellant, the next sentence in para 2.26 is
• equally important. That sentence reads as follows:
"Service needs to be locked to a particular RF Sector of
a base station, otherwise is'sues of ADC and comparison
with limited or full mobility takes place." H
232 SUPREME COURT REPORTS [2008) 7 S.C.R.
A 40. According to the appellant, reading the above two
sentences in para 2.26 of the Consultation Paper, it is clear that
TRAI gave up the premises theory on 17 .3.2005 and has
accepted the contention of the appellant that FWA services stand
restricted to one base station and not to the premises of
B subscriber.
41. As stated above, we find no merit in these arguments
on abandonment. Firstly, in our view, para 2.26, quoted above,
has a headnote. That headnote, quoted above, indicates the
question raised before TRAI during the consultation process.
C The question was whether ADC was admissible for wireless
access? In this connection it may be stated that at one point of
time, the idea mooted was that all fixed service providers,
including BSNL, were entitled to ADC. This was one of the items
on the Agenda on TRAI. It is in this context that para 2.26 has to
D be read. If ADC was to be made admissible for Fixed Wireless
services provided by all fixed service phones then the pricing of
the product would become an item of dispute not only between
cellular/mobile operators and fixed service providers but also
inter se amongst fixed service providers, i.e., between those
E who complied with PSR and those who did not. In fact, but for
PSR, the difference between WLL(F) and WLL(M) would stand
obliterated. Therefore, TRAI thereafter referring to its directive
dated 4.3.2005 invited response from service providers to the
suggestion of the appellant that services need to be located to
F a particular RF Sector of a base station. Inviting such response
cannot be construed as abandonment. Moreover, the later
correspondence indicates that even foreign experts nominated
by the appellant have certified that linkage to a particular RF
Sector of the base station would result in deterioration in the
G quality of the services provided by the appellant. In our view, the
true test to differentiate between WLL(F) and WLL(M) services
is: whether the impugned service of the appellant is capable of ' .
being confined as far as its mobility is concerned to the
subscriber's premises. If not, the impugned service is WLL(M)
H for levy of ADC. There is no dispute that the impugned service,
RELIANCE INFOCOMM LTD. v. BHARAT SANCHAR 233
NIGAM LTD. & ORS. [KAPADIA, J.]
'"'\
as far as its mobility is concerned, cannot be confined to the A
premises of the subscriber. In other words, since the impugned
service is not capable of complying with PSR test it is WLL(M).
42. We reiterate that we have examined the policy
framework and the technology to demonstrate that right from
,,. (
inception and, particularly after migration to UAS licence, the B
appellant as a service provider knew the distinction between
WLL{F) and WLL(M) and, therefore, the impugned directive
dated 4.3.2005 issued by TRAI was clarificatory in nature and,
therefore, that decision cannot be termed as unilateral decision,
as submitted on behalf of the appellant. c
43. One more fact needs to be mentioned that the
impugned directive dated 4.3.2005 came to be issued by TRAI
after giving show cause notice to the appellant as far back as
15.1.2005. It is true that the show cause notice was given in the
D
I J,
context of certain advertisements given in the newspaper by
Tata Teleservices Ltd. and by Reliance lnfocomm Ltd .. However,
vide the said show cause notice(s) the appellant was called
upon to explain why the impugned service is not WLL(M). In
fact, a reply was given to the show cause notice by the appellant
on 24.1.2005 which indicates that the appellant clearly E
understood the show cause notice and, therefore, gave its
explanation as to why the impugned service should be treated
as WLL(F) and why the impugned service should not be
categorized as WLL(M). We may mention that, keeping in mind
the technology, the policy framework and the thrust of the entire F
correspondence between TRAI, DoT and the appellant herein,
it is very clear that the concept of FWA was well known in the
market and in the business right from 2003 and in that light we
hold that the impugned circular dated 4.3.2005 of TRAI was
clarificatory in nature and, therefore, the demand made by BSNL . G
for the period 14.11.2004 to 26.8.2005 is valid in law and justified
• in terms of the UAS licence.
44. As stated in our judgment pronounced earlier in Civil
Appeal No. 5850 of 2005 etc. in the case of Tata Teleservices
H
234 SUPREME COURT REPORTS [2008] 7 S.C.R.
;>'
A Ltd. v. BSNL & Ors., we are not required to decide in this case
quantification of the amount in question as the claim and
counterclaim made by the appellant herein against BSNL and
vice-versa is not the subject matter of this appeal. Those
questions are left open to be decided in accordance with law at
B the appropriate stage by the competent authority under the 1997
Act. Suffice it to state that, the impugned circular dated 4.3.2005 ..
issued by TRAI falls under Section 13 of the 1997 Act as
clarification. The reasons gritan hereinabove are in addition to
the reasons given by TDSAT in its impugned order dated
17 .1.2006. We find no infirmity in the reasons given by TDSAT
c in its impugned order.
45. Accordingly, the civil appeal is dismissed with no order
as to costs.
S.K.S. Appeal dismissed.
D
'"
•
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